The Debt Management Office (DMO) yesterday said it will appoint two international banks as joint lead managers, and a local lender as financial adviser for the federal government’s proposed issuance of $1 billion Eurobonds this year.

The Eurobond sales this year is the first tranche of a $4.5 billion Nigeria Global Medium-Term Notes Issuance Programme that runs through 2018. It is also the first since Nigeria tapped the market in July 2013, and an inaugural issue in 2011.

According to the DMO, the sale will “enable Nigeria to have the flexibility of quickly taking advantage of favourable market conditions in the international capital market to raise funds if and only when the need arises.”

Bond advisers provide unbiased research reports on the broadest range of bonds and fixed income securities. They critically assess each security and provide an investment recommendation for their clients to choose the best investments.

The DMO said it had called for bids from prospective managers and local lenders for participation in the project and that the bids would be opened in Abuja, on September 19.

It also stated that the joint legal advisers in the project are expected to render services including: provide legal advice to the DMO in all areas as may be required, including all relevant documentation required for the establishment of Federal Government Medium Term Note (FGMTN); review all relevant Nigerian laws and regulations and the laws and regulations of other jurisdictions, to ensure full compliance with such laws and regulations in the packaging, execution and documentation of the FGMTN.

It also stated that the scope of work of the advisers will include: the review of the mandate or engagement letters for the other transaction parties in compliance with relevant laws and market practices, and any other agreement or contract that may be required for the successful execution of the FGMTN.

Requirements for the technical and financial bids according to the DMO include, evidence of registration with relevant regulatory authorities in the domestic capital market (for Nigerian law firms) and international capital market (for international law firms), particularly in the United Kingdom and the United States of America.

LEADERSHIP recalls that President Muhammadu Buhari earlier this year, assented to a record N6.1 trillion budget for the 2016 fiscal year. The treasury intends to borrow to plug the budget’s N2.2 trillion deficit. The government is increasing spending to stimulate Nigeria’s economy after it contracted by 0.4 per cent in the first quarter as revenue dwindled amid lower oil prices and a decline in output.

The International Monetary Fund had projected that the nation’s economy could shrink by 1.8 percent in 2016.

 

 Nigerian SMEs To Get $9m Equity Investment From AfDB

The African Development Bank (AfDB) has approved a $9 million equity investment in the Fund for Agricultural Finance in Nigeria (FAFIN) to provide expansion capital to agricultural small and medium-sized enterprises (SMEs).

AfDB, in a statement published on its website yesterday, said FAFIN is a first-generation private equity fund that provides financial, capacity-building and technical assistance to commercially viable SMEs in the Nigerian agribusiness sector.

The statement explained that FAFIN used a unique value chain-centric approach, a combination of equity, quasi-equity and convertible loan instruments to provide loan for SME’s.

According to AfDB, FAFIN implements its strategy and constructs its portfolio through a bifocal lens consisting of the twin objectives of competitive financial returns and measurable positive social impact.

The Fund is jointly sponsored by the German KfW Development Bank and the government of Nigeria through the Federal Ministry of Agriculture and Rural Development (FMARD). The Fund Manager is Sahel Capital (Mauritius) Ltd, a fund management firm incorporated in Mauritius in 2013.

The project is expected to deliver strong development outcomes from household benefits and employment through the creation of a large number of jobs and the provision of certain agricultural products.

It also said this would bring about positive gender and social effects through the implementation of out-grower schemes and supporting rural development and private sector development, adding that the alleviation of financial constraints faced by agribusinesses would enhance agricultural value-chains.

“The project’s contribution to inclusive growth is expected to be significant, given the large numbers of jobs to be created and out-growers to be reached at the level of sub-projects,” it said.

Its contribution to green growth is expected to be low, because the Fund targets the agribusiness sector with some expected negative effects on the environment.

The Fund’s primary focus will be on SMEs across the agricultural value-chain with crop value-chain and geographic diversification. It aims at fixing broken value-chains to increase efficiencies, reduce post-harvest loss, and increase smallholder farmer incomes and SME agribusiness profitability.

Investment instruments will be primarily quasi-equity (convertible bonds, preference shares and structured royalties) and direct equity. The ticket size ranges from $500,000 to $5million.

The Fund is aligned with the bank’s 10-year strategy focusing on inclusive growth, strengthening agriculture and food security, and access to local SME finance. It added that this encapsulated in the bank’ High Five Development Agenda for Africa, specifically ‘Feed Africa and Industrialise Africa’.

It is also in line with the bank’s strategy for Agricultural Transformation in Africa (2016-2025) and Strategy on Jobs for Youth in Africa (2016-2025). Others are the bank’s Country Strategy Paper for Nigeria (2013-2017), which supports an enabling environment for agriculture.



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